Q. I’m not happy with my stock broker but can’t afford to move everything if it means selling and paying capital gains. Can stocks and ETFs in managed accounts be transferred to another brokerage firm without first cashing out of the first account?
A. It will depend on the assets, but in most cases, you’re going to be okay.
Assets can usually be transferred without any tax consequence, said Chip Wieczorek, a certified financial planner and investment advisor with Tradition Capital Management in Summit.
He said the firm that will be accepting the assets is called the “receiving firm” and the firm sending the assets is the “delivering firm.”
What you want to do is called and “in-kind transfer.”
“Your new firm will send transfer paperwork to the delivering firm, on most transfer forms there is an option to check for an `in-kind transfer,” he said. “If not, there may be a special instructions section where you can indicate that you would like the assets to come over in kind.”
The assets will transfer just as they were at your current firm and the cost basis will transfer at the same time or shortly thereafter, Wieczorek said.
But there are some instances where the assets may have to be sold, such as if the fund or asset is proprietary or the receiving firm cannot hold an asset.
“A proprietary fund is a fund that is only sold at that firm and may have the current firm’s name in the title of the asset,” he said. “The other type of asset is an institutional asset or an asset that they may not have an agreement with that company to hold at the accepting firm.”
The majority of stocks and ETFs should transfer with no problem, so be sure have your accepting firm review your current statement to see what can be held in your new account, he said.
One last item: You mentioned the word broker.
“When researching your new firm, make sure the new advisor is a fiduciary,” Wieczorek said. “This means the advisor is making investment recommendations putting your interest first and that there is no financial incentive to put you in one asset over the other.”
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